GolfLogix has just launched the xCaddie, a GPS based device that aids golfers in estimating the distance to the next green. As things look up financially for the company with leases to golf courses and increasing awareness, the company ponders whether it wants to explore the retail channel. Through this case analysis, we explore the various paths before GolfLogix and recommend a course of action.
Company & Product
GolfLogix Inc., a three year old company with just six employees, has introduced an innovative product to the conservative world of golf. The xCaddie aims to improve the golfer's game by displaying the distance to the next hole. This information can then be used to select the appropriate golf club. As golf grows in popularity among a diverse cross-section of the population as shown in Exhibit 1, GolfLogix hopes to cash in on this trend.
After some success with leasing the xCaddies to golf courses, GolfLogix is considering targeting the individual consumer directly with its product. The potential advantages of this method would be :
To increase adoption by individual consumers thus putting pressure on the courses to buy into the complete system and get their golf courses mapped To provide a complementary source of revenue separate from the lease revenue to golf courses Some disadvantages however would be :
The personal xCaddies would be useless on courses which were not already mapped out. Newly mapped courses could not automatically be added to the library of courses on existing devices A rising personal ownership of xCaddies may discourage courses from buying their own devices killing a continuous source of revenue for GolfLogix If the retail channel is pursued, customers would expect all courses they frequent to be mapped involving a large incremental cost for each golf course. Even if a golf course is mapped, there is no guarantee that xCaddie owners will ever golf there. On the other hand, individual xCaddie owners may demand that their own favorite golf courses be mapped even if it does not make economic sense for GolfLogix to do so.
Consequently, even though the direct-to-user plan sounds attractive, we feel that GolfLogix should defer the plan till more golf courses are mapped. It should focus on the lease revenue by encouraging courses to be mapped under a risk-free trial offer which will showcase the advantages of the xCaddie system.
The xCaddie has several direct and indirect competitors and substitutes. Direct competitors include the Cart-mounted and PDA system also based on GPS technology and targeting the same niche market. The strongest competitor is the PDA-based system because of its price point,versatility and features. Its main advantage is the ability to upload and download user-calibrated course mappings. However, the customer uploaded mappings may be inaccurate. The Golflogix strategy will boast professionally done high quality mappings to differentiate itself. Given the rapid growth in PDA ownership, these GPS systems may quickly become popular for applications like driving navigation. On the other hand, the need to own a PDA can be considered a barrier to enter for non-PDA owners. The other direct competitor is the cart-mounted system with its many functionalities, however, it is both expensive and harder to use because ita?s fixed to the cart. The low-tech substitutes to the xCaddie are simple but inaccurate and inconvenient (say at night). These solutions are offered at no or low cost and are widely available on many courses. These products are indirect competitors since our target market desires the accuracy devices like the xCaddie can provide.
In order to make an informed decision about whether to enter the retail market or stay in the business to business (B2B) market, GolfLogix has to consider the value that its product brings to each of the markets.
For golf courses, the main benefit in leasing the xCaddies is an...
Please join StudyMode to read the full document